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Report: Brookfield in talks for Atlantica Yield stake

A unit of Brookfield Asset Management Inc. is reportedly in talks to acquire a minority stake in Atlantica Yield plc that could lead to a deal within weeks.

Brookfield's Brookfield Renewable Partners LP subsidiary is said to be in "advanced talks" with Atlantica's Spanish parent Abengoa SA for its 41% equity interest in the yieldco, Bloomberg reported Oct. 5, citing unnamed sources close to the matter. Abengoa initiated a sale process earlier this spring for its remaining equity in its yieldco affiliate, targeting institutional buyers that have been drawn to the cash flows of yieldco assets over the past year.

Atlantica's stock rallied on news of the acquisition discussions, rising to $20.44 a share on Oct. 5. The stock, however, dipped to $19.91 in morning trading Oct. 6, after opening at $20.40.

Brookfield is no stranger to to acquiring large equity stakes in yieldcos. The Canadian asset manager in 2016 purchased a majority interest in yieldcos TerraForm Power Inc and TerraForm Global, Inc.

Still, for a deal to be more likely attractive, Atlantica would have to receive pending waivers from a trio of solar facilities in the U.S. and Mexico, allowing the transfer of certain ownership and distribution rights from Abengoa, Jefferies LLC analysts noted on Oct. 6. The waivers are seen as a key item that could likely determine the pace of a potential deal signing.

"We believe a sale is highly unlikely without the remaining waivers," Jefferies LLC analyst Anthony Crowdell said in a Oct. 6 note. "The sale potentially nearing completion, however, could accelerate the negotiating process."